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About 6 months ago we decided to sell and I was figuring out which RE agent we wanted to use. I had just seen an ad for Offer Pad so I went on their site and filled out their pricing request form. It was pretty basic, asked where the house is, it's condition and any extras or upgrades present.
Got the offer back a few hours later and as I expected, it was about $20k+ below the Market Survey comps AND a recent appraisal that'd I'd gotten. We decided to wait for a bit as our area had hit a plateau and some prices were declining a bit due to some trashed former rentals hitting the market.
Fast forward to late January/early February, I had just seen an ad for Open Door and saw their name popping up on some houses in our large subdivision. Having a fresh memory of my less than stellar Offer Pad experience I was skeptical, especially after speaking to a RE agent friend of ours who thought they were a scam.
I went online and filled out their form, basically the same as Offer Pad with one exception. They clearly stated 3 things that I'd not expected. They said 1. You can cancel at any time up to the day of signing with no penalties. 2. You can choose your close date up to 2 months out. 3. You can rent back for up to 2 weeks.
They said they'd get the offer back to us within 24 hours and 4 hours later their offer was here. I had my RE agent run comps about a month prior and the Open Door offer was $11k HIGHER than the appraisal from 6 months ago and even higher than the Market Survey done just 30 days prior.
Being skeptical I talked with our agent (who's a personal friend as well) and was told that she knew of them and that the sales costs would drag the offer price below what a standard RE Agent could get us with a regular sale.
I thought about it and decided to go forward since I could cancel at any time but had waited longer than the 7 days allowed so they had to rerun the offer through their software. It went UP by $900! I accepted their offer and within 8 hours had a sales contract in my email. I read through it and it looked legit and just what they said it would be. I called our friend the agent and forwarded the contract to her.
In the sales contract Open Door gets 6% commission called "the Open Door Experience Fee" and we were responsible for paying most of the closing costs like HOA transfer fees and the customary seller fees. The sales contract clearly states in several places that you may cancel at any time, for any reason with no penalty.
The agent got back to us and said "it looks good, it's a standard AZ sales contract although they could've done a better job of writing it". She then went on to say "I'm surprised at the high offer, I don't know how they're making money doing offers like that". After we talked for a bit she said that she's not happy with companies like them because they're trying to take RE agents jobs and put 'em out of business but she didn't fault us for taking the deal as it was great.
Open Door came out and inspected the home, a main inspector, a roofing company and an A/C company showed up to go over the house. I was told I'd get the inspection report in a day or two. I was worried because I'd heard they "find" lot's wrong and then nail you with inflated repair costs as a condition of sale so I was expecting to have to cancel over this.
We received the inspection report which found a couple of minor things wrong, their estimate was $750 to repair the items. They gave us a choice of "credit Open Door with the repair costs, hire your own repair people or cancel".
I knew their repair costs were a bit inflated as I'd fixed 2 of the 3 the items (A/C related) they commented on just a year prior but figured I'd just credit them back as in the grand scheme of things it wasn't worth fighting over AND they'd raised their offer by $900.
Fast forward to now, the whole process except the final walkthrough is finished, all papers signed, sealed and delivered. The sale went through just like every other sale we've done with a couple of exceptions and those were. No sign in yard, no open houses, no unknown people tramping through our house, no insane demands or threats of pullout at the last minute, a full 2 months to close AND we rented back for 2 days so we could close and fully fund our new house without sitting in a hotel waiting.
So, for US it worked as they advertised and was well worth the 6% that we would've paid anyway had we used an agent AND we got to avoid the weeks of hassle that a "normal" sale causes...
To me, this model will work fine during a steady climb like the one we've been on for the past decade. I'm wondering how it's going to perform when the prices start falling and we go into a heavy buyer's market. I don't see it as a profitable company at that point. It's a good concept, but I personally don't see it being around for very long. I see this as a buyer's pool that is gobbling up properties with investment dollars, once the money changes and gets a little tighter, those investment pools typically dry up.
OpenDoor and another San Antonio outfit aren't 'in my neighborhood' yet, but just for the hell of it I asked Offerpad for a quote this morning. If they're anywhere close to we think we'll ask, when it comes time to move, I'll pay a premium to be out and done without the hassles.
You actually reminded me of something. When they inspected the house during the inspection period I was told that I could take out the water softener, washer,dryer and refrigerator and a couple of other things because they don't want them there. When I asked why I was told "we don't warranty items like that so we take them out". One other thing is they don't require seller disclosures which surprised me.
They do ask a couple of important questions when you fill out the questionnaire before the offer about Termites but other that that basic question nothing else.
I get that the model might not work for everyone but it was worth the try because I could always say no to their offer.
I just wanted to let people know that if you find the offer acceptable to give it a shot, they don't hide anything it's all up front and easy...
Jim:
Is the termites question a show stopper? The reason I ask is that I had termites in my house years ago. They didn’t do any significant damage. I have my house regularly inspected, and there have been no termites since.
Just filled out the online application for Open Door...unfortunately they said currently they don't consider homes in a flood or near flood areas. We are in Pinellas County Florida which anywhere is close to a flood area...
They offered me $527K, I just did it to see and out of curiosity, I already had an agent. That was well below value, even I sold below value at $550K but at the time I listed I simply had to sell fast as I was under contract on a new construction home and didn’t have the time to wait out the right offer. I then ended up getting plenty of money out of an investment and wouldn’t have needed to sell the house before closing the new one but ah well, hindsight is 20/20. Open Door didn’t make anything approaching a competitive offer, though.
I decided to go non-contingent on my purchase of the new house (which is not the original new house I had mentioned above -- this was a home for sale by sellers through a conventional realtor). This alleviated the issues with Rentback, etc. and I was pretty sure Open Door wasn't going to back out. Closed on the new house on July 17th, closed on the sale of the old house today (July 29th).
Most of the "work" of this transition has involved the new house. After the assessment and the $0 in repairs / concessions, I really hadn't done much with Open Door. There was a second lien from a piggyback mortgage that I paid off 9 years ago that had to be removed, but very little that was Open Door-specific. I got a couple of emails about walk-through.
I did do a fairly thorough self-cleaning of the house after it was empty, pretty much ensuring that the only thing OD would need to do to make the house move-in ready was some painting.
This morning was walk-through and the guy said everything seemed "perfect." So that cleared me for closing (no contract amendments), and I headed to that appointment (with OSN Texas in Plano, which exclusively works with OD acquisitions).
Closing was smooth. Closing costs appeared fair. The wire didn't arrive at my bank before the close of business but I'm expecting it in the morning.
Overall, I believe the trade-off in terms of net proceeds vs. hassle and dealing with a realtor and buyer was very worthwhile for me. Now, my brother's wife has a "friend of a friend" who says Open Door charged her for paint, carpet, windows, and deep cleaning, but I don't find a lot of evidence of that on the internet. We'll see if they try to send me some obnoxious post-close bill.
So, I ll add my final OD experience here as well. Much like Nepenthe above - easy peasy for us. I originally was scheduled to close on the 31st, but moved it up to the 25th....no problem doing so. Signed with OS National in Phoenix on the 24th, final walk through on the 25th was less than 10 mins, girl said place looked great....got my wire that afternoon.
So for us - bottom line VERY fair offer, 5.5% fee, no repair credits or concessions (Nada not a dime), no showings, and easy process.
Of course I do not know what they will sell it for yet....but even if they make a bit on it I won't be upset for the ease of it all.
Too late to edit the above - but OD just listed my place - 10K more than they paid me. There is no way they have done anything at all to the house yet - and it DOES need paint, some irrigation repairs, and possibly some areas of carpet.
So, if they did a straight turn around and get the 5.5% (about 10K) from me and then 10K more on the resell, without doing anything at all, that is not bad if it turns quickly.
HOWEVER I am sure they will have to come down from list when dealing with "normal" buyers. They WILL want some of the cosmetic stuff done, or a concession to cover it. So, my guess is they come out with 5K over what they paid me...but I ll watch for the final price and if/when the listing ever shows any pics. Right now it is only showing on Zillow and with no pics.
BUT, 49 views already in just a half day.
In my circumstance I ll gladly give up 5K to 7K not to deal with the hassle.
Of course the realtors will say we ll never know what THEY would have gotten for it - but as I mentioned in the original post I really am pretty familiar with my market....and the offer and sale price I got was very fair.
Interesting. Is the house you sold close enough where you can go check it out yourself? I only moved about five and a half miles away, so I figure I'll probably stop by and let myself in with their app and see what they did (almost certainly only paint) in a few days.
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